ASOS: Nick Robertson
The online fashion retailer boss on coming back from the Buncefield oil depot explosions which wiped out £3.8m of stock
Nick Robertson could be forgiven for thinking he’s been down on his luck.
On December 11, a day before online fashion retailer ASOS’s (formerly As Seen On Screen) busiest week of the year, the company’s only warehouse was partially destroyed by the Buncefield oil depot explosions near Hemel Hempstead.
The roof was lifted, the doors were blown off and a sprinkler pipe burst drenching £3.8m worth of stock. At the peak of Christmas trading, Robertson was forced to stop taking orders, refund 19,000 orders waiting to be shipped and suspend the companies share price. It remained closed until January 16. In terms of business disaster, does it really get any worse?
A surprisingly upbeat Robertson insists it does – and he doesn’t appear to be just putting a brave face on it. “Personally and from a business perspective we’ve been through worse – we can pay salaries and nobody was hurt,” he says. “We were absolutely insured to the hilt so with cover for loss of gross profit and assets, we shouldn’t be any worse off at all.”
Even with losses covered, not all CEOs would be so calm. Besides tangible damage costs such disasters can have a major effect on brand value and reputation – if customers are let down once then they often don’t come back. Again, Robertson is unperturbed.
“It was a national disaster and there wasn’t anybody on the planet who didn’t know what was going on and everyone was sympathetic,” he says. “And, if you take the positives out of it, we’ve had more coverage from this than anything else we could have done.”
ASOS’s sales figures on its first day back trading suggest Robertson is right to be positive. On January 16 it took a record 10,300 orders, double its previous best.
Robertson adds: “On yesterday’s orders we have come back stronger than ever before and I’m confident of full recovery and a much stronger year. Our insurers are paying for an ad campaign we wouldn’t normally have had and our share price today is up 2p on the day the disaster happened.”
Disaster recovery – surviving Buncefield
“As a one-warehouse company, insurance was an area we never scrimped on,” a vindicated Robertson says. However, no matter how well you’re covered for a disaster, you never know when one will strike. On Sunday December 11, Robertson was in a hotel celebrating his first wedding anniversary.
“I got a call at 8.30 in the morning,” he recalls, “it was very patchy but the security guard on the site had seen it all from a distance and, thank God, we knew nobody was hurt.”
Robertson was informed within a couple of hours that the warehouse had been partially destroyed but that he wouldn’t be allowed access to it until at least the Wednesday. That meant the company had to stop taking orders immediately. “It was a painful decision to make but the right one,” he says.
A board meeting was hastily scheduled for 8.30 the next morning but it was Robertson’s responsibility to suspend the company’s shares and prepare a press statement announcing the decision in advance of that. “I was still working blind and had no idea how bad it was or when we’d be selling again so there was no alternative but to suspend the shares,” he says.
At the board meeting the company put together an action plan. “There was a small disaster recovery plan in place but we’re a growing company; we hadn’t got the substantial DR plans other companies probably have in place. That said, when you’re forced to focus on sorting out a problem it’s surprising how quickly things come together. Within an hour of the meeting we started refunding the 19,000 orders, emailing customers and had changed the temporary message on the homepage.”
However, while the company was able to immediately resolve customer issues there was an anxious three-day wait until the premises could be inspected. “Ironically, if we’d known the warehouse had been totally destroyed we could have started sourcing a new one straight away,” says Robertson, “but we just had to wait.”
Premium insurance and help from Philip Green
Once it was confirmed the warehouse had been damaged but not destroyed the first step was to get the situation assessed for the insurer. Robertson had the good fortune – or perhaps insight – to use the same brokers (Seymour Pierce) as Arcadia boss Philip Green, who kindly offered the services of his own insurance assessor. “He turned up in a chauffeur-driven Bentley, which immediately put my mind at rest,” says Robertson. “He [Green] and his company have been absolutely brilliant.”
Within a day of the assessment, ASOS received its fi rst interim payment from its insurer to cover cashflow. It’s about to receive a second one, but the process and payments will be ongoing for 12 months. “It’s a 12-month process and it’s the collective aim of the company and the insurance company to get the business back on track within that period,” says Robertson. “It’s the only way to assess the full damage so we could still be claiming against this in 11 months’ time.”
As soon as the insurance status was confirmed and a stock take undertaken, suppliers were contacted and the share price was unsuspended with a target date to be back taking orders by the end of January. “We’ve been very responsible,” says Robertson. “And to be back up and running in just five weeks is really pleasing.”
Despite this, he has faced criticism. While ASOS’s six monthly results showed total sales up 78% to £8.3m, profits of £126,000 turned to losses of £120,000 due, ironically, to moving warehouses. One newspaper carried a report from a shareholder criticising Robertson’s decision to locate so close to an oil depot.
He dismisses it out of hand, pointing to the fact you simply can’t legislate for such occurrences and that the location’s transport links are excellent. “I’ve got hundreds of thousands of shareholders and you’re always going to get one with a confl ict of interest – and basically it’s baloney.”
The benefits of being big
ASOS’s ability to cope, and Robertson’s insistence it’s overcome more cumbersome obstacles, is a testament to how the company has grown up in recent years. Launched in 2000 at the pit of the dot com crash it’s survived downward market trends to now arguably lead them. It was also rushed into floating on AIM in 2001 as part of a timescale set by the company’s initial ‘shell maestro’ investors.
Year-on-year 80% growth and annual turnover poised to break £20m makes ASOS the UK’s second largest clothing and apparel site behind Next. Robertson insists the success is down to its transformation from small entrepreneurial company to acting and thinking like the big public company it is now.
“It’s been like a game of two halves,” says Robertson using the proverbial footballing cliché. “We used to have a throw-yourself-on-the-sword, totally committed bunch of people and that was great,” he says, “but there came a stage where that wasn’t enough on its own. The stage where the lines crossed between making money and not making money allowed us to get in better skilled people to help improve the business.”
This has meant the appointment of a whole new senior management structure and considerable expansion of the company’s buying department. As ASOS rotates its stock every four to six weeks, good relationships with suppliers and establishing agreements with key brands is core to the company’s growth.
“The more buyers and more experienced they are the more lines we can sell,” says Robertson. “We’ve gone from introducing two to three hundred lines a month to six to seven hundred. Providing we do our jobs right and our styles are the latest fashions there’s no reason why sales shouldn’t accelerate.”
Staff numbers overall have grown to 250 from 80 two years ago and Robertson admits not only has “every bit of the business changed” but that “it now feels like a big business”. He adds: “Four of us can’t sit round a table and go off changing things anymore. There’s a lot more committee stuff.”
Perfect platform for ASOS’ growth
While ASOS has evolved behind the scenes, Robertson is adamant its original concept is as strong as ever and he thinks the internet as a retail medium has more potential than any other.
“I love it for so many reasons,” he says. “I’ve only got one shop to manage, one security guard, one warehouse. There are so many facets to the way we do business and so much less to manage.”
Robertson insists you’ll never see ASOS on the high street and instead is focused on ways of staying ahead of the competition. “We’re a tiny fl y in the ointment to the likes of Topshop but they’ll look to do more online, as everyone is. That’s a good thing in many ways as it shows more business is going on the internet, but it also means we must stay on top of our game.”
For Robertson that’s about staying true to the founding principals: hot, fast celebrity fashion, plus new innovations such as ASOS TV, which will launch later this year featuring the latest celebrity fashions – that of course can be bought through the site. “It’s a fantastic proposition,” insists Robertson. “The main drivers for us are broadband, broadband, broadband and more broadband. It’s getting bigger and cheaper and we just need to evolve with it.”
The company also knows its customer base better than ever. It tracks their interests and buying trends as well as leading retailers and sends out an email newsletter and catalogue twice weekly to 750,000 customers.
“The ASOS customer is anything between 16 and 35 but typically 23 or 24 and she’s fashion mad,” says Robertson. “She used to be younger but has become a little older as we’ve sold more expensive brands,” he adds. “The day I have to worry is when the press stop taking pictures of beautiful famous people and girls stop wanting to dress up.”
He does acknowledge however that with the deluge of tired TV formats diluting what constitutes ‘celebrity’, ASOS needs to remain blockbuster not Big Brother. However, as befi ts his personality, he’s not unnecessarily concerned. “We’re about style icons and they’ll never go out of fashion,” he asserts.
No Exit in mind
From founder to CEO has been a gruelling journey, but Robertson insists he’s enjoying it more than ever and has no plans to exit. “I’m as passionate now as the day I started and my job is easier. For the first time in 10 years I feel I’m loving it and making a positive contribution instead of trying to do everything.”
Public company or not, it’s clearly still his baby. Coming from a family of entrepreneurs stemming back to great-grandfather Austin Reed and as recent as his brother, the founder of Scoot, it’s surely no surprise. Robertson holds 17% of the company and insists that if business dropped and the share price fell he’d be the first seeking backers to buy it back.
However, the signs are that’s unlikely to happen. ASOS was in the right shape to cope with a disaster and Robertson is confident it’s equally equipped for further growth.
Name: Nick Robertson
Proposition: Online fashion retailer
Turnover: £8.3m (six months up to September 2005)
CV: Also started celebrity endorsement company Entertainment Marketing. Brother of the founder of Scoot, greatgrandson of Austin Reed